NEW YORK, Nov. 15, 2012 /PRNewswire/ -- Despite dire predictions
about the pharmaceutical industry's future, some pharma companies
will reinvent themselves, and according to Pharma 2020: From vision
to decision , a new report issued today by PwC, the industry is on
the cusp of a golden era of renewed productivity and
prosperity. However, its success is not guaranteed.

Health reform is accelerating the need for wholesale changes in
the pharmaceutical industry and its response to rising demand for
medicines, major scientific and technological advances, economic
pressures and socio-demographic shifts - in both developed and
growth markets around the world. In its report, PwC portrays
a beleaguered pharma industry that has reached a critical juncture:
the prospect exists for unprecedented global growth in the future,
but the industry's prevailing business model and management culture
are ill-suited to capitalize on the market opportunity over the
next decade and beyond.

Pharmaceutical companies that survive a difficult transitional
period in the coming years can prosper in 2020 if they are willing
to prune their pipelines and make tough decisions to address rising
customer expectations, poor scientific productivity and cultural
barriers, the report says.

"A healthy, vibrant and responsive pharma industry is vital to
society for the development of new medicines," said Steve
Arlington, global pharmaceutical and life sciences advisory leader,
PwC and a principal author of the report. "More needs to be
done to support and encourage long-term investment in the discovery
and development of medicines to treat serious disease. We
need to all work together to improve the wellbeing of
populations."

Rising Customer Expectations
One of the major hurdles the pharma industry faces is the rising
healthcare bill. The demand for medicines is rising and
global pharmaceutical sales could increase by nearly 40 percent to
roughly $1.6 trillion by 2020. Yet the expenditure as a
percentage of gross domestic product (GDP) is climbing in countries
in every income bracket and most steeply in mature markets where
the industry has historically made most of its money. At a
time when all economies are feeling the tougher times, the industry
has to position itself as part of the solution, says PwC.

The pharmaceutical industry's customers – physicians,
patients and payers – are demanding evidence of better
outcomes with hard, real-world data as a precondition for payment
and pricing for new medicines. PwC's research suggests that
pharmaceutical companies have a choice: either offer more
value without charging more or prove that it can remove costs from
another part of the healthcare system to justify premium
pricing.

In mature markets, there is an enormous opportunity for the
pharmaceutical industry to help payers save money and for providers
to deliver better quality care for less money, according to PwC's
report. Approximately 85 percent of global health spending
currently goes to healthcare services delivered by physicians,
hospitals and other providers, and less than 15 percent goes to
medicines. By demonstrating that medicine can reduce spending
on costly medical services and procedures, PwC estimates that
pharma's share of healthcare expenditure could rise to 20 percent
by 2020.

In growth markets, the demand for medicines is expected to more
than double by 2020. PwC's analysis, however, found that the
opportunity in these markets is fragmented and comes with
challenges. The report suggests that with the right strategy,
pharmaceutical companies can be profitable in these markets but
they need an approach that targets the right population with the
right medicine, and delivers value tailored to the market.

"The pharmaceutical industry is living the tale of two markets,"
said Michael Swanick, global pharmaceutical and life sciences
industry leader, PwC. "In established markets, pharma
companies have to deliver 'real' value in solutions and cures to
prove their worth and rebuild trust in the sector. In growth
markets, companies must respond responsibly to a growing
population's needs, recognizing demographic and cultural
diversity. The industry has historically found change
difficult to deal with but time is running short and decisions must
now be taken. Those that do, face an optimistic future, while
failure to respond now could lead to many regrets."

Improved Productivity by Pruning the Pipeline
PwC's report stresses the industry's need to rebalance expenditures
and invest more in the early part of the R&D process to improve
productivity that will deliver returns on R&D investment.
PwC's analysis found that most of the products that will be
launched in the coming years are already in the pipeline, but are
not aligned with medical needs and demand or rising expectations
from healthcare payers, providers and patients. Record levels
of late-stage failures are one indication of the crucial need for
pharmaceutical companies to marry the pipeline with the market.

Breaking Down Cultural Barriers – From Secrecy to
Collaboration
Despite significant external changes in the market, the culture
within the pharmaceutical industry has changed little over the past
few decades, and may be more deeply entrenched in reaction to
emerging threats, PwC's research found. New entrants to the
market and new technology are beginning to disrupt the status quo,
and pharmaceutical companies can expect an even more demanding
commercial environment going forward.

PwC's report says that new pharma will be less secretive, more
collaborative and that the industry's top figures are likely to be
mavericks that have vision and courage to break the mold.

Pharma 2020: From vision to decision is the latest in the Pharma
2020 series of reports from PwC's Global Pharmaceutical and Life
Sciences Industry Group. It is the culmination of a year-long
research initiative that included meetings and interviews with 50
pharmaceutical industry executives and the input and perspective of
more than 70 reviewers, including PwC professionals, industry
executives and regulators around the world.

The first report in the series, Pharma 2020: The Vision, was
published in 2007 and outlined an ambitious perspective on the
future of pharmaceutical industry. In five subsequent reports, PwC
provided detailed analyses of the challenges and opportunities
pharmaceutical companies face and their implications for research
and development, sales and marketing, supply chain and
finance. The current report revisits the vision in light of
new challenges that have emerged and focuses on important decisions
senior management must make now to get to 2020. Since the
series began, nearly 100,000 copies of Pharma 2020 reports have
been downloaded or shared with industry.

About PwC's Pharmaceutical, Medical Device and Life Sciences
Industry Group
PwC's Pharmaceutical, Medical Device and Life Sciences industry
group (www.pwc.com/us/pharma and
www.pwc.com/us/medtech) is
dedicated to delivering effective solutions to the complex
strategic, operational and financial challenges facing
pharmaceutical, biotechnology and medical device companies. We
provide industry-focused assurance, tax and advisory services to
build public trust and enhance value for our clients and their
stakeholders. Follow PwC Health Industries online @PwCHealth.

About PwC's Health Industries Group
PwC's Health Industries Group (www.pwc.com/us/healthindustries)
is a leading advisor to public and private organizations across the
health industries, including healthcare providers, pharmaceuticals,
health and life sciences, payers, employers, academic institutions
and non-health organizations with significant presence in the
health market. Follow PwC Health Industries online @PwCHealth .

About the PwC Network
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they're looking for. We're a network of firms in 158 countries with
more than 180,000 people who are committed to delivering quality in
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